FMC Corporation v. Shoshone-Bannock Tribes, s. 17-35840

942 F.3d 916

FMC CORPORATION, Plaintiff-Appellant/ Cross-Appellee,

v.SHOSHONE-BANNOCK TRIBES, Defendant-Appellee/ Cross-Appellant.

Nos. 17-35840

17-35865

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 17, 2019 Seattle, Washington

Filed November 15, 2019

Gregory G. Garre (argued), Elana Nightingale Dawson, and Genevieve P. Hoffman, Latham & Watkins LLP, Washington, D.C.; Ralph H. Palumbo, Yarmuth Wilsdon PLLC, Seattle, Washington; Lee Radford, Parsons Behle & Latimer, Idaho Falls, Idaho; Maureen L. Mitchell, Fox Rothschild LLP, Seattle, Washington; for Plaintiff-Appellant/Cross-Appellee.

Douglas B. L. Endreson (argued) and Frank S. Holleman, Sonosky Chambers Sachse Endreson & Perry LLP, Washington, D.C.; William F. Bacon, Shoshone-Bannock Tribes, Fort Hall, Idaho; Paul C. Echo Hawk, Echo Hawk Law Office, Pocatello, Idaho; for Defendant-Appellee/Cross-Appellant.

Before: Michael Daly Hawkins and William A. Fletcher, Circuit Judges, and David C. Bury,^* District Judge.

W. FLETCHER, Circuit Judge:

For over 50 years, FMC Corporation ("FMC") operated an elemental phosphorus plant on fee land within the Shoshone-Bannock Fort Hall Reservation ("Reservation") in Idaho. FMC’s operations produced approximately 22 million tons of hazardous waste that is currently stored on the Reservation. The waste is radioactive, carcinogenic, and poisonous.

In 1990, the U.S. Environmental Protection Agency ("EPA") declared FMC’s plant and storage area, together with an adjoining off-reservation plant owned by J.R. Simplot, a Superfund Site under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). In 1997, the EPA further charged FMC with violating the Resource Conservation and Recovery Act ("RCRA"). A Consent Decree settling the RCRA suit required FMC to obtain permits from the Shoshone-Bannock Tribes ("the Tribes"). FMC and the Tribes negotiated an agreement under which FMC agreed to pay $1.5 million per year for a tribal use permit allowing storage of hazardous waste. FMC paid the annual use permit fee from 1998 to 2001 but refused to pay the fee in 2002 after ceasing active plant operations. FMC has continued to store the hazardous waste on the Reservation despite its failure to pay the use permit fee.

The Tribes sued FMC in Tribal Court, seeking inter alia payment of the annual $1.5 million use permit fee for waste storage.

Under Montana v. United States , 450 U.S. 544, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981), there are two potentially relevant bases for tribal jurisdiction in this case—two of the three so-called " Montana exceptions." First, "[a] tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements." Id. at 565, 101 S.Ct. 1245. Second, "[a] tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe." Id. at 566, 101 S.Ct. 1245. After years of litigation, the Tribal Court of Appeals held in 2014 that the Tribes have regulatory and adjudicatory jurisdiction over FMC under both Montana exceptions. The court held that FMC owed $19.5 million in unpaid use permit fees for hazardous waste storage from 2002 to 2014, and $1.5 million in annual fees going forward.

After the decision of the Tribal Court of Appeals, FMC sued the Tribes in federal district court. FMC argued that the Tribes did not have jurisdiction under either of the Montana exceptions; that the Tribal Court of Appeals denied FMC due process because two judges on the Tribal Court of Appeals were biased against FMC; and that the judgment by the Tribal Court of Appeals was unenforceable. The Tribes counterclaimed, seeking an order recognizing and enforcing the judgment of the Tribal Court of Appeals. The district court held that the Tribes had regulatory and adjudicatory jurisdiction under both Montana exceptions, that the Tribal Court of Appeals had not denied FMC due process, and that the Tribal Court of Appeals’ judgment was entitled to comity, and was therefore enforceable, under the first but not the second Montana exception.

FMC appeals the district court’s judgment in favor of the Tribes. The Tribes cross-appeal the district court’s decision that the Tribal Court of Appeals’ judgment is not enforceable under the second Montana exception.

We affirm the judgment of the district court. We hold that the judgment of the Tribal Court of Appeals is enforceable under both Montana exceptions.

I. Factual and Procedural Background

The Shoshone-Bannock Tribes are a federally recognized Indian tribe comprising the eastern and western bands of the Northern Shoshone and the Bannock, or Northern Paiute, bands. The Tribes are organized under the Indian Reorganization Act of 1934, 25 U.S.C. §§ 5101 et seq., and are governed by the Fort Hall Business Council, a legislative body consisting of seven elected members. Shoshone-Bannock Tribes, Tribal Government , http://www2.sbtribes.com/government (last visited Sept. 19, 2019). The ancestral lands of the Tribes included land in present-day Idaho, Oregon, Nevada, Utah, Wyoming, Montana, and parts of Canada. See Shoshone-Bannock Tribes, http://www2.sbtribes.com/about (last visited Sept. 19, 2019). Pursuant to the Fort Bridger Treaty of 1868, 15 Stat. 673, and related executive orders, the Tribes today have sovereign authority over the Fort Hall Reservation. The Fort Hall Reservation originally encompassed approximately 1.8 million acres, or 2,800 square miles. See id . The Reservation now encompasses approximately 544,000 acres, or 840 square miles, in what is now southeastern Idaho. Ninety-seven percent of the Reservation is tribal land or land held in trust by the United States for the benefit of the Tribes and their members. Approximately three percent of the Reservation is fee land owned by non-members.

A. FMC’s Phosphorus Plant, Consent Decree, and Permit Fees

From 1949 to 2001, FMC Corporation and its predecessors owned and operated an elemental phosphorus production plant occupying 1,450 acres. Virtually all of the property is fee land on the Fort Hall Reservation. FMC’s plant was the largest elemental phosphorus plant in the world. FMC Idaho, Plant History , http://fmcidaho.com/plant-history (last visited Sept. 19, 2019). For most of its operation, FMC obtained or mined raw materials for its plant from tribal and allottee lands on the Reservation. See , e.g. , id .

Hazardous waste from the plant’s 52 years of operation contaminates FMC’s land on the Reservation. Approximately 22 million tons of hazardous waste are stored in waste storage ponds on the site. Some storage ponds are capped. Some are not. Some ponds are lined. Some are not. Phosphorus, arsenic, and other hazardous materials contaminate an additional 1 million tons of loose soil and groundwater throughout the site. Millions of tons of slag containing radioactive materials contaminate the site. Somewhere between twenty one and thirty railroad tanker cars containing toxic phosphorous sludge are buried on the property. There is no lining underneath the tanker cars and no cap above them. As will be described in greater detail below, the hazardous waste in the storage ponds, tanker cars, soil, groundwater, and air at the site is radioactive, carcinogenic, and poisonous.

In 1990, EPA declared the FMC plant, as well as an adjoining off-reservation plant owned by a different company, J.R. Simplot, as a National Priority List Superfund Site—the "Eastern Michaud Flats" site—under CERCLA. See 55 Fed. Reg. 35502, 35507. The National Priorities List is a list of the nation’s "worst hazardous waste sites." EPA, Superfund Cleanup Process , https://www.epa.gov/superfund/superfund-cleanup-process (last visited Sept. 19, 2019).

In 1997, EPA charged FMC with violating RCRA. RCRA regulates the disposal of solid and hazardous waste. To avoid litigation, FMC began negotiations with the EPA over the terms of a possible Consent Decree that would settle the RCRA suit. Though not a formal party, the Tribes participated in the negotiations. Among other measures, the proposed RCRA Consent Decree required construction of a treatment facility and additional waste storage ponds on FMC’s fee land on the Reservation. As a condition to obtaining the Consent Decree, the EPA required FMC to obtain relevant permits from the Tribes. See Consent Decree, Case No. 4:98-cv-00406-BLW (D. Idaho, July 13, 1998).

Pursuant to the Tribes’ Land Use Policy Ordinance ("LUPO" or "Ordinance") and associated Guidelines, the relevant tribal permits included a building permit for construction of the treatment facility and waste storage ponds, and a use permit for storage of the hazardous waste. FMC and the Tribes met in July 1997 to discuss the permits. During negotiations, FMC consented to tribal jurisdiction. See, e.g. , Letter from the Land Use Policy Commission to FMC (Aug. 6, 1997) (stating that following the July meeting, "We understood that FMC would recognize tribal jurisdiction within the exterior boundaries of the Fort Hall Indian Reservation."); Letter from J. Paul McGrath, Senior Vice President and General Counsel and Secretary of FMC, to the Fort Hall Business Council, Shoshone-Bannock Tribes (Oct. 30, 1997) (stating "[i]n connection with the land use permit, we did agree that we would consent to tribal jurisdiction in that area"). FMC applied for the building and use permits in August 1997.

While negotiations were proceeding, the Tribes considered and then adopted amended LUPO Guidelines for storage of hazardous waste on the Reservation. The Tribes finalized the amended Guidelines in April 1998. The amended Guidelines required an annual use permit for storage of hazardous waste on the...